YouSaid · the spoken record

Jim Rickards

lines on the record: 66
first: 2023-01-13
most recent: 2023-01-13
sittings or episodes: 1
sources: podcast

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“A couple places I'm the editor of really the number one leading financial newsletter called Strategic Intelligence. So if you just Google Jim Ricker's Strategic Intelligence, you'll find the landing page. I'm very active on Twitter. My handle is at James G. Rickards, R-I-C-K-A-R-D-S, one word, so at James G. Rickards. Interview links, articles, commentary on baseball. I put that all out on Twitter. And of course, my book's sold out, available on Amazon Barnes& Noble and bookstores in your town.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“People all over the world are extremely adaptive and inventive when it created, when it comes to making new forms of money. When I was a kid, you know, they're 10 years old, there'd be some uncle or somebody who said, hey, kid, don't take any wooden nickels. I was like, what's a wooden nickel? Well, it turns out during the Great Depression, there actually were wooden nickels. The Fed screwed up so barely there wasn't enough money. Communities would make their own money out of wood and paint a little logo on it. And merchants accepted it. It circulated it. It was a way to expand the money supply. And they'll be able to do that. The research was to do it, by the way, with silver dollars, which is where the whole American currency system started. I just went out to American Silver Eagle. If I'm willing to tender it and you're willing to accept it, the heck with your central bank digital currencies, people will go to that once they realize and they are realizing that this is a tool of political surveillance and political enforcement by weaponized FBI. Maybe they'll have one, Nichols, but I think American silver dollars work just fine.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Could subpoena MasterCard, I guess that's you need judicial help with that. But the central bank digital currency they would know. And then they can retaliate very simply with a couple keystrokes, freeze your account, seize your account. And for example, let's say you work and you got a regular job and you get a paycheck. Well, they withhold tax. When you paycheck, you get a W2 at the end of the year, file their tax return, do a reconciliation. But that's not true for doctors, lawyers, consultants, architects, small business people, entrepreneurs, professionals, et cetera. They don't have withholding tax. But all of a sudden they say, hey, you know, you lawyers, you doctors, we're going to take 10% out of your bank account every month with a couple keystrokes. Again, we'll send you 1099 or whatever, 1099 crypto. And you can sort it out with us a year later on the tax return. Those kinds of seizures freeze us with holdings, political surveillance, weaponized FBI. That will all come to a peak as a result of the central bank digital currency. That's the bad news. The good news is Americans.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Pilot program that will be coming very soon. And that is the last step in the totalitarian agenda because they'll have to do two things that once they'll have to bring in the CBDC, but also eliminate cash because we don't like central bank digital currencies, you'll just say, well, okay, I'll get a big pile of cash and pay cash and that. So you got to get rid of cash also. But once you do, you're now in the total surveillance state. So right now, if I go into a bookstore and I buy a book, like, you know, I love Rhonda Sandis, MasterCard may know, maybe, maybe not. They know I bought a book. But all of a sudden the government and the FBI, the weaponized FBI and the new Gestapo, they're going to know that I bought a book in praise of one of the president's political enemies. And that makes me a political enemy. Or if I give a campaign contribution to a Republican politician and so forth. So they already know you're there. You've got your iPhone unless you turn it off and stick it in the Far Day sack. They know you're there through GPS. They don't know exactly what you're doing.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“But my point is the world was shocked. It's like, hey, it's one thing that sanction titanium exports or something. You froze the reserves of a central bank. So countries like Turkey, China, Saudi Arabia, they're watching this and saying, hey, what if the U.S. doesn't like something we do? What if they don't like us next year and they freeze our reserves? We better get out from under the dollar before that happens. And one of the ways to do that is gold. I mean, buying German bonds doesn't put you much further head because Germany is kind of a vassal state of the United States when it comes to this until they break away. But gold does it. Gold isn't an alternative. Crypto is not my crypto is not going to come too much. But central bank digital currencies will. That's different. They're not cryptocurrencies. They're not recorded on a blockchain. The ledger is maintained by the central bank or the treasury finance ministry, as the case may be. They're definitely coming. They're already here in some places coming soon. The US Biden has signed an executive order accelerating that path beyond the research, the R&D phase into a”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Well, they did in advance. They anticipated this. A veil Nabulina, who's the head of the Central Bank of Russia, I discovered it was the only central bank in the world who knows her job. She built Russian reserves 20% of Russian reserves are in gold. Round numbers about $500 billion, a little more, actually about $600 billion reserves, of which over $100 billion, about $120 billion are in gold. So they anticipated this. And going back to your earlier question, Trey.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Russia leaves Ukraine. Well, I got news to the president. Russia is not leaving Ukraine. You could have had that deal before the war. There's never been a war that was easier to prevent, but the U.S. wanted the war. You know, Victoria Newland and Tony Blanken, Jake Sullivan and Susan Rice and all the other warmongers in the White House, they wanted the war. They got it. Now, good luck.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“The memo. But now it's even better than that because we're destroying the oligarchs. Actually, some of the oligarchs are taking the wealth back to Russia as a safe haven. Putin's strength is the military, the intelligence, the Orthodox Church, and everyday Russians. Those are the four pillars of his strength. The oligarchs are not part of it. So that doesn't affect things one way or the other. But just look at energy prices in Europe. They're going to freeze in the dark this winter. It's already happening. The Germans are running around saying, we've got our reserves out to 100%, natural gas reserves up to 100%. Well, that's true, but they don't tell you that the reserves are only 20% of the requirements. Sometimes they have 100% of 20%. They don't have the rest. And it's not coming from anywhere, not anytime soon, not for years. And we all know what's going on with energy prices, home heating prices in the United States. This is feeding the inflation. That's making people poorer. And there's more to it than that. But the point is these sanctions have been a complete disaster. And what remains so, and Biden said, we're not removing the sanctions until...”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“We're going to destroy the ripple. Ripple's stronger today than it was then. Russia has not lost oil sales, but every Western Europe doesn't want to buy. India's buying it. China's buying it. India never bought end of the sanctions. They're friends with the United States. They're a democracy. But they're like, hey, this is not our fight. And we're going to buy all the oil from Russia that we can get. So it's had very little impact on Russia, some, but not a lot. It's been awful for Western Europe and the United States. You know, they ran around and they seized all these oligarchic assets. You know, townhouses in Belgrade, yachts, you know, we got all this stuff. We're taking all this wealth away from the oligarchs. Putin should send Biden like a handwritten thank you note. He hates the oligarchs. We're doing Putin a favor by taking down the oligarchs. Putin's support, he never wanted to take this guy's long because they were somewhat powerful. But what he said was to the oligarchs, this is 20 years ago, you can keep your wealth, but keep out of politics. Don't get in my way. And they put Khodorowski in jail. There's ahead of Yucos. He's been in jail ever since because he didn't get.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“The markets for other kinds of currencies. Yeah, that's entirely feasible. So that's going on around the world. One of the things that's driving it, this was happening anyway, but one of the things that drove it was the US sanctions, which are and EU sanctions on Russia, which are complete blunder. I actually teach financial warfare at the U.S. Army War College, and it's a seminar style in the elite class of about, you know, 11 or 12. Lieutenant Colonels, Navy commanders, full colonels, all branches, State Department, CIA, and others. That's a small group of about 12. They're the future big brains, you know, future national security advisors and so forth. And when I talk to the class in April, not far from the start of the war, I said these sanctions are going to fail. I said, it's going to be worse than fail because they're actually going to backfire and hurt the United States more than hurts Russia. And there was some skepticism in the class. And I welcome that. And I think it's good. They should express that. But I was exactly right. The Russian rule today is significantly stronger than it was at the beginning of the war in Ukraine. Remember Biden.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“A ferment, if you will, the Brits, as Brazil, Russia, India, China, South Africa, but they now style themselves BRIC Plus. So when they have their meetings, they invite Argentina, Iran, Turkey, and others. They are working on a new commodity-backed currency that they would use for trade between and among themselves. The Shanghai Corporation Organization, Russia, China, and some of the Central Asian republics, but again, they're welcoming new members, including Pakistan and others. They're working on this. There's something called the Eurasian Economic Union, which is kind of Putin's answer to the European Union. Same thing. They're working on a new payment currency, comrade Xi Jinping from China, is in Saudi Arabia as we speak, meeting with the Crown Prince and the King King Salman and MBS, Mohammed bin Salam, to talk about a lot of things, but included among them with the Chinese, sorry, would the Saudis be willing to sell oil for Chinese yuan? Again, I'm not saying it's a reserve currency. It's not, but as a payment currency, it's something you could swap.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Absorb global savings. Now, if you don't have that, you can't be a reserve currency because nothing to invest in. It won't be the Chinese you want. Forget it. There's no Chinese bond market of any magnitude. There's no rule of law in China. And nobody would buy a Russian ruble bond. There's no good rule of law in Russia. And it's not just having bonds. Let's say you started issuing bonds. Well, great. You need dealers. You need primary dealers. You need repo. You need futures. You need options, settlement, clearance, rule of law, hedging techniques. You need a whole infrastructure that takes, oh, you know, at least 10, maybe 20 years to build if you set it out to build it. The US Treasury Mark has been around since Alexander Hamilton. So we've had 230 years to get this right. So it's going to be very, very difficult to dislodge the dollar as the reserve currency. As a payment currency, that's completely different. When we were kids, we could use baseball cards and bottle caps if we wanted to. And basically anything that I wanted to tender that you're willing to accept is a potential payment currency. Now here, there is a lot more.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“When we talk about the rise and falls of currencies kind of broadly, and I have mentioned SDRs and I mentioned gold, to me, that's a horse race. There were probably five or ten entrants to the horse race. I talk about all of them, but we'll see which one comes out on the top at the end. But it's really important in this discussion to distinguish between a reserve currency and a payment currency because they're two different things. Now, the reserve currency is a big deal. And you say the US dollar is 60% of global reserves, which it is, it's not really dollars. It's not really the currency. The People's Bank of China does not have a palace of $100 bills stacked up in their basement. What they have is a dollar-denominated security. So they have treasury bills and treasury notes, which are denominated in price in dollars, and you need dollars to buy them. But it's not really the currency that's the reserve. It's the security that's the reserve. And what gives the U.S. dollar its strength in the form of U.S. Treasury securities primarily is the fact that you have a large liquid, pretty good rule of law securities market that can absorbs.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Good as it gets. If you're going to invade, like, you may not be stronger than the United States, but on a relative basis, this is as strong as you're going to get. It doesn't make sense to wait because you're going to get weaker. And if you're going to do it, do it now. There's a lot of historical precedent for this. In 1941, nobody thought the Japanese Navy was stronger than the US Navy, but it was as good as it was going to get because FDR was ramping up production in anticipation of being in World War II. So the Japanese said, now or never, and they went for it at Pearl Harbor. Same thing with Germany in World War I. Nobody thought the German Navy was stronger than the Royal Navy. But again, the Royal Navy was expanding the Germans were stuck. They didn't have the resources. They said, this is as good as it gets. So that peak Germany, peaked Japan, and now peak China is a very dangerous period because it's not that they're superior, but the relative strength is at a peak. And if you're going to go for it, go for it.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“By the way, that is part of this Phina thesis. And the scholar's name is Hal Brands. I didn't think it was his last name. Hal Brands and Michael Beckett were the two leading proponents of this, but other scholars are looking at the same thing. So I just gave you a long digression on Chinese decline, and it's all factually based. There's lots to back that up. But they said that that makes China more dangerous right now. And the reason is if you were the rising power, off the Ray Dalio theory were correct, and I don't pick them Ray, you could mention a lot of people say the same thing. If that increasing power theory were correct, if the US were a declining power and China were an increasing power, what's the hurry? You wouldn't invade anything right now. You would just wait. Why not wait until that gap gets bigger? Why not wait until you get relatively stronger than you are today and then do the invasion? It'll be that much easier when you do. But the opposite is the case. By the way, if we know it, the Chinese know it. China's at declining power as of now or as of very recently. And if that's the case, this is...”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“And we did see this after the Black Death in the late 14th century, early 15th century, returns to labor went up, wages went up because there weren't enough workers. Now it didn't last maybe last 75 years, but eventually the monarchs got the upper hand again. But it was a good, very good period for labor because a third of the European population was dead.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“And then you need a large segment of the kind of working age population, 25 to 54 as caregivers to the people in their 80s and 90s who are suffering dementia. Now, that's a very worthy occupation, but it does not lend to self-detroductivity gains. There's been no increase in productivity in giving someone a bath in 5,000 years. I mean, maybe, okay, 1870, indoor plumbing and hot water. Nice going. But that's it. So you're taking productive people, putting them as caregivers, which does not lend itself to productivity increases. A large segment of your population is not productive at all, and many suffering from severe cognitive decline. So the portion that's left who are actually productive working age people doing productive things, not caregivers and not people in their 80s and 90s, keeps getting smaller. Some scholars estimate that that's actually inflationary because you're going to need to pay them.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“That's enough to keep your population constant. Why not two? Well, the answer is infant mortality and not every birth makes it to maturity so they can have children. But on average, two people have 2.1 kids. That'll keep your population constant. The replacement rate, that's the replacement rate. Birth rate in China right now, they say 1.7, but they always lie about their numbers. Other experts put it at kind of 1.2. Some people think it's one. That is behind this demographic disaster. But the reason it's worse is that while you're not getting new bursts to replace the population, the existing population is getting older. And hundreds of millions are moving into their 70s, 80s, and 90s. Those age groups are highly age cohorts, are highly correlated with Alzheimer's, Parkinson's, dementia, various kinds of cognitive decline, all of which are common at that age. They're incurable, and the progressive in the sense that they get worse. So they're there. They're alive, but they're not the least productive.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Known as the middle income trap. But the biggest problem, well, bigger than everything I just mentioned, is they are facing, and it's here now, it's going to play out over a 50 or 55 year period, the greatest demographic collapse in history, worse than the Black Death, worse than the 30 years war, worse than the Spanish flu of 1918. They're going to lose 600 million people in the next 50 or 60 years. Population is going to go from 1.4 billion to about 800 million. Now, there are a lot of different equations for GDP, but the simplest one is workforce times productivity. How many people are working times how productive are they? There's your GDP. How do you maintain any kind of economy if you're going to lose 600 million people, which they are. And it's worse than that because they're losing them because their birth rate is so low that the magic number or the key number is 2.1. If two people have 2.1 kids,”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“They stole from us or firms in Europe, Siemens, or something like that, and that's not being cut off. It's worked for them so far. When I started development economics in the 1970s, we thought that the hard part was to get from low income to middle income. But if you can do that, then it was a straight path to high income. You would just kind of keep going. It turns out that's not true. It's actually kind of easy to get from low income to middle income. You don't have too much corruption, which is you bring the population from the countryside to the city and you give them basically assembly type jobs. It's like when people say iPhones are made in China. Not really. They're assembled in China. Those parts come from 26 different countries. The semiconductors come from South Korea. But they assemble them in China. But that's kind of the Lego style manufacturing. And you can get there and you can get $10,000 per capita annual income, although not evenly distributed. But getting from middle income to high income, that's really hard. And that requires technology and high value added production, and they can't get there. They're stuck in what is...”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Just to give you one example, in the US, when you buy a house, if you get a mortgage, the mortgage lender shows up at the closing, they give the seller the check, you sign the note, and they record it and you've got a mortgage. In China, they have a mortgage system, but you take out the mortgage before the house is even built. And then you take the money and you give it to the developer, and they use it to build the house. Well, guess what? The developer stole the money. They used it to cover other debts. The houses never got built, but you still have the mortgage. You sign the note, and the banks are trying to collect all mortgages from people who never got the houses. So this is leading to some, you know, if not rise, demonstrations, and social unrest. And, you know, the government's bailing out the banks and the banks are bailing out the lenders. But that's a complete real estate collapse. So the water's poisoned, real estate sector, which is one of their biggest internal investment sectors, is collapsing. There's a dollar shortage. You see the reserves coming down. Charger information available. You look at a month-by-month of reserves are coming down sharply. And they don't have the technological edge. Anything they've got.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“If the water in China is poisoned, it's not just dirty. You got to clean it up before you can use it. It's poisoned. I know a lot about the mining industry. I invest in mines, and I know that in the US and Canada, for example, if you use cyanide to extract gold from gold ore, which you do, that's pretty standard. You've got to weigh the cyanide before you use it. Then use it, case it, weigh it again, and it better be the same. Like none of that cyanide can escape careful control and disposal. In China, they do the same thing. They dump the cyanide into the rivers and a lot else besides. in terms of mining, industrial output, and so forth. So Hathawater is poisoned. They don't have that much water to begin with, not enough for the size of the country. If you look at the geography of China, half of its desert or high plateau or mountains, people picture rice paddies. That's about 20% of the land in like the southeastern corner.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“A scholar at the John Salvin School of Bencur National Studies. Becky's a scholar at Tufts University. And they took a hard look at this and said, no, this is as good as it gets for China right now. They point to a number of reasons, and I can kind of go down the same list. I've done the same research.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Well, look, I know Ray is a great guy and world's greatest head show manager and deserves a lot of crazy smart guy. He's still kind of coming up the curve in terms of history and geopolitics and so forth. But yeah, the conventional wisdom is the 20th century was the American century, the 21st century is going to be the Chinese century or the Asian century, and they're going to blow past the United States in a matter of years in terms of being the world's largest economy, higher GDP, technology coming on stream, artificial intelligence, quantum computing, stronger military. They'll be at worst Western Pacific hegemon, if not a global hegemon. And it's all China and they're going to rule the world. Everything I just said is wrong, but that is the conventional wisdom. And you see variations of that all over the place. You know, Jeffrey Sachs, Richard Haas, and Ray Dalio, all smart people, but that's fundamentally flawed. Now, the Peak China thesis, and to give credit, and I mention the names in the book, there's been advanced by Michael Becky, and forget how that is.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Multipolar world of clubs who trade with each other inside the club but not with members outside the club. And that would be kind of a little bit more of the way it was in the Cold War. I remember, I think it was late 1960s, maybe early 1970s. PepsiCol announced they were building a bottling plant in near Moscow. You would have thought that world peace had broken out. It was like unbelievable. You know, you get a Pepsi in Moscow. There was one bottling plant. I mean, it wasn't more than that. But that's how a restricted trade was at the time. that a single soda plant in Moscow was breeded with, you know, cheers to the rafters. And Russia, you know, traded, but they were pretty much just producing oil and some basic commodity exports. But the world may be going back to a place like that because of, first of all, the need to build more robust resilience supply chains and also because for a variety of ideological and geopolitical reasons.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Or whatever. I refer to it in my book as The College of Nations. But basically the idea is we'll still have supply chain, we'll have some outsourcing, we'll have trade, but it will be like a club. And to be in the club, you're going to have to be kind of a democratic, liberal, you know, in the political sense, society with a good rule of law. That's an important part of it that respects human rights. And that would be the United States and Canada, Australia, New Zealand, Western Europe, probably India, people think this is emerging market. Well, it is, but it's the largest democracy in the world, 1.4 billion people. So they'll be in the club. And they'll trade with each other, but China will not be in the club because of genocide and killing baby girls, 20 million baby girls and ethnic cleansing and concentration camps and torture and a lot else. They'll be out of the club. They can form their own group and they may team up with ASEAN members, South Asian members, Central Asian republics, Russia, and others. But this will be probably more than a bipolar world, maybe a”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“In the short run, maybe reduce margins to some extent, but I describe it as like buying insurance. You know, you have insurance, I have insurance, nobody wants their house to burn down, but sadly if something happens, you're glad you have the insurance. And when you pay that insurance bill, when you write a check or pay it online or whatever, you don't think you're wasting your money. You're incurring a cost, but you say it's money well spent because I'm getting insurance against this catastrophic outcome. It's the same thing with supply chains. Maybe skilled labor in Phoenix is a little more expensive than skilled labor in Taiwan. Maybe not, by the way. That's an interesting question. But even if it is, you're getting robustness and resilience that you don't have sitting there with your factories in Taiwan. Janet Yellen coast is friend shoring. We're going to bring our trading relationships to friendly countries. Emanuel Macron has called it Constellation of Nations. He has a vision for a new EU that's side by side, but different rules maybe get the UK involved.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“And the US military has a doctrine we call it the broken nest theory. And it's based on a Chinese proverb, ironically. And the proverb is, if the nest is broken, how can the eggs survive? And the answer is they can't. So TSMC Atomic Semiconductor know that if China we know, that if China bays Taiwan, the US military is going to destroy Taiwan's semiconductor physically, whether you burn it to the ground, bomb it, whatever it takes, destroy it because we don't want it to fall into Chinese hands. Taiwan semiconductor know that. So they're like, okay, well, we want to survive as a company. We'll build in Arizona. So on the one hand, it's a defensive play. So the company survives if there's an invasion by China. But on the other hand, it's a really good example of onshoring. And by the way, what are you doing? You're reducing those supply chains. Remember, I said there were 9,000 miles long from Shangshang's in New York or Shanghai to Amsterdam. Well, now you're compressing them. You're making it simple. It will probably increase costs in some ways.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Well, maybe both, but this is an example of what I call supply chain 2.0. And yeah, the onshoring example, it's true. And, you know, people kind of root for that. How do you get more high paying jobs in the United States? That's a good thing. But it's a lot bigger than that. Take what you just said, and you're exactly right and just kind of expand that. So Taiwan Semiconductor, a good example, largest and most sophisticated semiconductor producer in the world by far. They've got the best chips and they're huge. So they've announced, as you described, Trey and you're right. They've announced $40 billion to build four new semiconductor fabrication plants, so-called fabs, in the Phoenix area. Well, wait a second. They can build them in Taiwan. They could probably build them in China via Vietnam. Why are they building them in Phoenix? The answer is that there's a danger and probably a growing danger.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Now you call around, you scramble, you find another provider, eventually someone has that part, but it just goes to show how fragile the whole thing is. And then that's just one example I could give you many, but you take the point that as these things break down and in a complex system, when it starts to break down, I mean, the best way to understand it, I don't like to overuse metaphors, but sometimes they're helpful. If you have like a beautiful oriental vase and somebody like knocks it over and it breaks into 5,000 pieces, you don't sit there on the floor and try to put the pieces back together. You've got to go get a new vase. And that's what happened to the supply chain. It's broken. It cannot be put back together. It's just cascading, one cascading failure after another. And we're going to need new supply chain. They've always been around. We'll get a new one, but it's going to look very different.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Everyday low prices, but we're now paying the cost, the hidden costs of the breakdown. I can give you another concrete example. So Germany is very well known for their car manufacturing. So you've got Mercedes and Portional and BMW and Volkswagen and the rest. Well, it turns out in a car, there's about 100 miles of wire, which is not surprising. I mean, think of all the connectors, engages, and lights and radios and telecommunications, you name it. You've got all this wire. We can't just throw the wire on the front seat or stick it on the floor. They have these conduits, these custom-made plastic conduits that they run the wires through. And it's one of the first things you have to put in the car, in the assembly line, so you can get all the wires to where they're supposed to go. Turns out those conduits are made in Ukraine. Well, sadly, there's a little war going on, and they can't get those conduits produced. So you had to shut down. This did happen. Shut down BMW assembly lines in Germany because you couldn't get a single plastic part from Ukraine.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“And that was the beginning of the edge of globalization. And I've been involved in international finance and law and commerce for a long time before that. And in the 90s, my kids were college age at the time and their friends. All they wanted to talk about was globalization. I said, well, what's this globalization? We did international economics for a long time. But globalization really was no because now China was in the game, Russia was in the game. Supply chains were longer. Supply chain science worked. And it became more and more and more efficient and reduced costs. But here's the problem. When something's that densely connected, when something's that complex and that stretch, there are hidden costs. The visible costs were passed along to the consumers, but the hidden costs were not taken into account. Something that is that complexity is extremely fragile, extremely frail, to the point that if one aspect of it, one link in the chain breaks, the whole thing collapses. And that's where we are now. We've reaped the benefits of what Walmart calls.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“So it's very, very efficient in that respect. But something else happened around that time, which was 1989, had the fall of the Berlin Wall. 1999, you had the dissolution of the Soviet Union. In 1992, Deng Xiaoping conducted what he called the Southern Tour, which was really when China entered the global economy. They had some success in the 1980s, but that went off the rails in 1989 with the Tiananmen Square massacre and the U.S. backed away from China. I was traveling in China at the time in 91-92. And I went all over. It wasn't like in downtown Beijing. I was in Wuhan, actually Shangshang, Jiang, elsewhere. I didn't see a single American. I mean, there were Brits, Germans, Aussies, but no Americans. But in 92, we patched things up. And then that's when China really started to boom. So in this very compressed period from 89 to 92, you had the fall of the Berlin Wall, the Soviet Union, the opening of China, new republics in Central Asia, more independent republics in Eastern Europe and so forth.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“In terms of things like just in time delivery and sourcing certain reducing number of supply of your transport lanes and reducing the number of warehouses, et cetera, Walmart event is something called cross docking. It used to be a truck pulled up in the warehouse and they moved the goods from the truck to the warehouse. Then another truck pulled up. They picked the goods out of the warehouse, put them on the truck, and went on his way. And Walmart said, wait a second, why don't we skip the warehouse? Just move it from truck A to truck B, send it to its destination. That's called cross docking. And they did. And that's very efficient. And for that matter, what's the idea behind a big box store? A big box store like Costco or Walmart is the warehouse. They don't need warehouses because the store is a warehouse. So all that was done in the name of efficiency and cost reduction, and it worked. Then cost reduction could either mean higher profits for a supply chain participant or lower cost for consumers. And in practice, it meant both.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Not far from the equator, they found weapons which were made in present day Syria, Damascus, what was Phoenicia at the time, they found figs and olives and olive oil, which would have come from Italy or Greece. They even found a little carving of Queen Nephriti, which is probably on its way to Alexandria, Egypt. The point is, I plotted out all those locations, and the Baltic Sea, not that far from the Arctic Circle, Sudan, not that far from the equator, as far east as present-day Iran, Persia at the time, as far west as Italy, maybe Spain. It was five million square miles. That's how big that supply chain was on a single vessel in 1,200 BC. So there's nothing new about supply chains, but what was new in 1989 was supply chain science. It was a combination of increased computing power, algorithms, applied mathematics, artificial intelligence, better data collection. With that toolkit, engineers and scientists and mathematicians could get a much better grip on supply chains and make them more efficient.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“But I also talk about what I call supply chain 1.0 and supply chain 2.0 and to your point about where this is all going. So supply chain 1.0, I date from 1989 to 2019. So what happened in 1989? I mean, I actually start the book with a story in the introduction about a shipwreck found off the coast of Turkey in a place called Ulubarun by a sponge diary. It was a Bronze Age shipwreck dated to around 1200 BC. It was a sponge diary found at Pot he said had the ears while experts knew the ears were handles and let's say you move the pot around, but notified the authorities, the Turkish archaeological bureau went in. They did a 10-year underwater excavation and it was by far the most laden interesting diverse shipwrecks they had ever found. Again, we're talking the Bronze Age. But in that vessel, they found amber, which comes from the Baltic region. They found gold, which comes from at the time came from Sudan.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Store with 10 stops in between the transportation lanes. Every one of those intersecting points is a vertical supply chain. Again, all the components in the oven, all the components in the truck, et cetera. And you pretty quickly, this is where you say this in the book, the supply chain is not part of the economy. The supply chain is the economy. And the meta supply chain is this vertically and horizontally expanded supply chain of supply chains that I described. And you can just kind of keep going in terms of inputs and all the way back to mines and semiconductor fabrication plants and so forth. And you realize that if it's not literally infinite, it might as well be infinite because you cannot model it. You can model it theoretically and you can do some computational work around it, but there's not enough computing power in the world.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Middle to the baker. Well, came on a truck. Oh, another truck, another diesel, another driver, et cetera. How did the mill make the flower? Where did they get their ingredients? Well, they got wheat from the farmers, really. How did it get there? Well, it came on a train. Well, trains run on diesel. Who built the train, you know, et cetera. Then back to the farmer, where the farmer gets the seeds. And by the way, the farmer needs tractors and diesel fuel and workers and GPS and a lot of other scientific equipment irrigation systems. And they need fertilizer, nitrogen fertilizer to grow the wheat. And where does that come from? How does it come from Russia? Russia's in a little war right now. We're not buying their fertilizer and so forth. So you can kind of keep going. So that's what's called the extended supply chain. So Baker Destore is the simple supply chain, but farmer, fertilizer on the one hand from Russia to the store with all those intermediate inputs is the extended supply chain. But then if you think about it, if you think of the supply chain as being a horizontal from farmer to”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Sure. Well, let's start with a simple supply chain. We'll kind of build off from there. So you're in a supermarket and somebody's buying a loaf for bread and you say to them, where'd the bread come from? They go, oh, well, there's a bakery on the other side of town. They bake it and they send it over here on a truck and I buy the bread. Okay, that's a simple supply chain. But even that, it's not so simple because who made the truck? You know, where did the diesel come from? Where was that refinery? Where did the truck driver get his training, et cetera? Oh, the love for bread. Well, it has a wrapper. Was it plastic or paper? Well, could be either one, but that came from somewhere. And then you get over to the baker. But let's just go further. So looking at the baker, how do they bake the bread? Well, they baked it in an oven. Where'd the oven come from? You know, it's got tempered glass and steel and the semiconductor and thermostats and all kinds of parts might be from 15 or 20 different countries that was assembled and put together and then the oven was produced. Well, how do you make bread? Well, use flour. Well, okay, where'd the flour come from? Oh, it came from a mill. Okay, well, how did it get from the mill?”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Into thin air once he gets inside the Fed. So the Fed is not only raising interest rates, they're reducing their balance sheet, they're reducing the money supply. And I expect that'll hurt velocity even more. So this is really extreme form of money tightening, which will cause the recession we talked about earlier.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Inflation was barely at about 1.6. The Fed's target was two the whole time. They only got there a couple times and it didn't last for more than a month or two. I always say it's a sad day when a central bank wants inflation and they can't get it. So the whole time the Austrians are screaming, and I shouldn't pick an Austrians, the Neocanes and monotrists said the same thing. Money supply, money supply, fed printing, fed printing, you're going to cause inflation. There was no inflation. It just wasn't. The Fed couldn't even reach their target. But the reason was velocity. The money printing was there for sure into the trillions, but the velocity wasn't. So here we are today. The Fed, by the way, for those screaming about money, supply, money printing, the Fed is burning money. The Fed is actually reducing the balance sheet. They're reducing M0, which is their base money, by selling bonds to Wall Street. So it's the opposite of money creation. When you sell the bonds, you get the money and it disappears. When just as the Fed creates money out of thin air, the money disappears.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“M1, which is the Fed money currency plus bank checking accounts, which is a pretty good measure in my view. That velocity has gone from 10 to 1 in the last 10 years. And those $1 used to produce $10 of goods and services. Today it produces about $1 of goods and services and stangerously close to getting below one where you could actually print money and it would reduce GDP because people are hoarding it, not spending it. Anyway, I ticked up a little bit very recently, but it's not clear that that's going to be sustainable. But we'll see. But either way, the velocity has crushed. And this is why we never had any inflation of any magnitude from 2009 to 2019. So from the end of the global financial crisis to the pandemic, so those are kind of extreme bookends, if you will, but for 11 years from 2009 to 2019, average annual growth was real growth was 2.2%. It wasn't 3.5, which Friedman kind of hypothesized. It was 2.2%.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“It varies, but that's a pretty good central tendency. So looking at the other side, he said, velocity is constant, so it's pretty simple. If P is 1 and Y can only grow at 3.5% and velocity is constant, then all you have to do is dial the money supply up or down to target no inflation, no deflation, maximum real growth, and that's monetary nirvana and needman used to joke, you know, you don't need a board of governors of the Federal Reserve, you just need a computer to do what I just described. There's a little more to it than that, but that's basically it. But Freeman was wrong about one important thing, which is velocity is not constant. It was from 1950 to 1980, which is the main part of his career. So maybe you cut him a break there, but velocity is not constant. It has plunged. Velocity is just GDP divided by money supply, but there are different measures of money supply. I always find it curious everyone thinks they know what money is. Well, the Fed doesn't know because they got M0, M1, M2, they're making up as they go along. But if you take...”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“But if I stay home and watch TV and don't spend any money, I have a velocity of zero. So velocity is just that turnover of money. How rapid is it? And I remind people that the money supply is now about $25 trillion. But $25 trillion zero is zero, meaning if you don't have velocity, you don't have an economy. So it's not just money supply. It's money supply times velocity equals nominal GDP. And nominal GDP has two parts. P is a price index and Q or Y. Different people use different variables is real GDP. So you take real GDP times the price index gets you nominal GDP. So the Y is inflation or deflation. So Milton Friedman looked at that and said, well, okay, we want Y to be 1, meaning we don't want inflation or deflation. We want nominal GDP equal to real GDP, so we want y to be one. Real GDP in a mature industrial economy can grow about 3.5%, and that's about right. It was right about that.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Velocity is as important as any other variable. It explains why all the people screaming about money printing, you know, don't really understand the interaction of monetary policy and economic growth. So a lot of ways to write the GDP equation, a lot of ways to calculate it. But one of the ways that the monetarists do it, and Milton Friedman advocated this, so they're really Irving Fisher invented it much earlier in the 1920s, but a very simple equation, not to get too geeky, but n times v equals p times q. Well, m is”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“You know, go to sleep. It's only in a world without a gold standard where you have blundering central bankers that the price of gold goes up a lot and it preserves wealth. You know, I mean, gold's been going sideways for a few years at an interim peak of $2,039 an ounce in March 2021. So a little over a year ago, about a year and a half. But in 1999, it was $200 an ounce. And today, if it's $1,800, okay, it's not $2,000, but $1,800, that's still nine times your money in about 23 years. So it does its job, but certainly in inflation, when we talk about inflation deflation and the tug of war, we have inflation for the short run. We're going to have disinflation, borderline deflation early in 2023. We're going to have a very severe recession. But if the Fed decides to print money to get out of the recession, then the inflation may come roaring back again. So it's like a pendulum, but gold will serve you very well through those cycles.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“So I'll just take the two. So the Fed figures a very low rate of inflation over a long enough period of time diminishes the value of the dollar and helps to pay off the national debt. And that is what we did from World War II until 1980. The debt-to-GDP ratio went from 120% to 30% when Ronald Reagan was sworn in. But it's been going up ever since. So that's why the Fed likes a little bit inflation, but not enough to notice, I would put it that way. But the danger is in trying to get there, they go too far because they don't really know what they're doing. They do in theory, but their models don't work. And they actually end up in this deflationary trap that we talked about. Now, where does gold come in? Gold holds its value. It doesn't mean I have a lot of, I know a lot of people have asked to gold. I talk about gold all the time. And they're like, you know, particularly the Austrians, you know, they're banging the table. We have to go back to a gold standard, get away from a fractional reserve banking. Let's have a gold standard. I said, well, be careful what you wish for. Because if you have a gold standard, you're not going to make any money. The goal will be pegged and that'll be that. You might as well.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Sure, it's a very good example. I use calculus when I have to, but I always tell people most economic problems can be solved with like fifth grade math. To your point, Trey, let's just take 6% inflation. That's pretty high. 6% inflation cuts the value of the dollar in half in 12 years. Okay. 12 more years. It's half again. So from birth to the age of 36, which is just kind of early mid-career, whatever, the value of your dollar has been cut by 84%. That's with 6% inflation. Of course, higher rates of inflation is even faster, but even 2% inflation because it didn't have in 35 years, half again in 35 years average lifetime to the age of 70, your dollar purchasing power has been cut by 75%. That's with 2% inflation, not that high. Why central banks think that's the target rate? I have no idea. The way I've described it is it's like eight little kids who sees a lot of money in his mother's purse and it's like 50 bucks. If I steal the 50 bucks, I'll get caught. But if I take two bucks, nobody will notice.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“So deflation is one of the most serious economic problems you can have. It keeps the central bankers up at night because they know they can't do anything about it. And you can't even play the gold card because you don't have a gold standard. You don't have a gold peg. So it's a very, very serious problem.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT
“Which it did, the price of corn, wheat, steel, energy, everything else went up. And he turned the deflation around, turned it into inflation. We had good growth. Unemployment came down. Stocks rallied. And then the Fed right on cue, screwed it up again in 1937 with premature monetary tightening. We went into a second severe recession in the middle of the Great Depression. But getting back to the point, what can essential bank do about deflation? The answer is nothing, but a government, a treasury, and a White House can devalue the dollar. Now, it doesn't do any good to devalue against euros or yen or the Chinese yuan or any other currency because that's a race to the bottom. But my first book, Currency Worst, was about. I devalue the new devalue, then I devalue some more, and you devalue some more. We never get any further ahead. In fact, it's a negative sum game. But gold is different. Gold can't push back. If you devalue against gold, gold just sits there. It can't devalue. It's not a currency. There's no central bank of gold. So it's perfect for that. The problem today, of course, is that we're not on a gold standard. You can't break a peg that doesn't exist. So you don't even have the FDR toolkit from 1930.”
2023-01-13 · We Study Billionaires · TIP514: Permanent Supply Chain Disruptions That Will Sink the Economy w/ Jim Rickards · IDENTIFIED FROM THE TRANSCRIPT